The United States Supreme Court heard two Medicaid cases this term that raise major questions about the program and the tensions it creates between the federal and state governments. On October 3, 2011, the Court heard oral arguments in Douglas v. Independent Living Center of Southern California, a dispute between California and its Medicaid providers regarding reimbursement cuts resulting from California's budget crisis. The Medicaid providers argued that the proposed cuts are so extreme as to violate federal law and thus the Supremacy Clause of the United States Constitution. Their contention hinged on the Equal Access Provision of the Medicaid Act, which commands states to pay healthcare providers that participate in Medicaid "sufficient[ly]" to ensure that Medicaid enrollees have the same access to medical care as other citizens in their geographic area. This provision is at the heart of Medicaid's aspirational design, which is meant to mainstream impoverished patients into the American healthcare system. Enforcement of this provision will be crucial for the success of the Medicaid expansion scheduled to begin in 2014. But, the United States' position in Douglas was decidedly deferential to states' decisions regarding Medicaid and went so far as to argue that only the Centers for Medicare and Medicaid Services (CMS) could enforce the terms of the Medicaid Act, a view that is contested by many.

On the other hand, the United States expressed a broad view of federal power when it expanded Medicaid to everyone up to 133% of the federal poverty level in the Patient Protection and Affordable Care Act (PPACA). This is a major philosophical shift for Medicaid that partially federalizes a program historically deemed an exercise in cooperative federalism. The Court heard oral arguments March 26 through 28, 2012, in Florida v. Department of Health and Human Services, and though much of the media and scholarly conversation has focused on the constitutionality of the minimum services provision, the first question in the states' petition was whether the Medicaid expansion constitutes impermissible coercion under the South Dakota v. Dole test for constitutional conditions on federal spending. Thus, the greatest change to the Medicaid program since its inception could be nullified by the Supreme Court as a matter of Spending Clause interpretation, even though the federal government has exercised power to influence the states within the known bounds of the Court's spending jurisprudence.

This essay focuses on the conflicting arguments made by the United States in its briefs in Douglas and in Florida v. HHS. Douglas had the potential to close the courthouse doors to both Medicaid enrollees and providers because of the United States' deferential stance toward the states, a position consistent with longstanding states' rights concerns in the Medicaid program. Even though the Court decided Douglas quite narrowly, litigation continues in California's federal courts and could return to the high court relatively quickly. In contrast, the federal government has advocated a very broad view of federal authority under the spending power to modify and expand Medicaid despite some states' lack of support for the federalized elements of Medicaid. This position is consistent with the reinvention of Medicaid effectuated by PPACA and the statutory structure of Medicaid itself since 1965.

This paper will evaluate the dichotomous positions the United States has advanced before the Court. First this paper will discuss the complexities of Douglas and the United States' surprising advocacy in that case. The essay will next address the grant of certiorari regarding PPACA's Medicaid expansion from the perspective of the United States' power-protective posture. Finally, this essay will evaluate the tensions between the United States' positions and will conclude that the Court's best course of action is to decide each case as narrowly as possible so as to allow Congress and HHS latitude to resolve their conflicting attitudes toward Medicaid and conditional spending.

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Notes/Citation Information

Annals of Health Law, The Health Policy and Law Review of Loyola University Chicago School of Law, Vol. 21, No. 3 (2012), pp. 513-540



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